Where to get basic information on Taxes

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Am am about to enter the labyrinthine world of German Taxes (egad!) and would love some advice about firstly, where to get some basic info, and then secondly who to turn to for professional advice.

 

So first things first... I am here on a two year freelance Visa (since summer of last year), and am about to sign my first client, an American firm. My projected income is about 16,000 Euros for the year with this client. Now I assume it is time for me to go to the FinanzAmt and get a number... :)

 

So my questions:

1. Does anyone have any basic resource about the first steps to do asa freelancer here in Germany? Either a website or a book. My German is fine, although I would love if there is also an English site just to start with.

2. Any recommended books to read or basic bookkeeping course to take to train myself in these matter? Although I intend to use a professional, (from what I have seen, this German law is overwhelming), I would still like to be as informed as possible.

3. About what I can expect my taxation to be here in Germany? I have heard that if one makes under 21000 Euros for the year, one pays no taxes at all. Is this true? If not, what is the threshold?

4. What is the story with MwSt? I believe that since this client is an American firm that I do not have to pay MwSt. Is this true?

5. Is it better for me to have the funds transferred to a German Account or an American one? Does it matter for any tax reasons? For any other reasons?

6. This client will potentially be a long-term one - meaning I expect/hope to be able to continue this work (which is only part-time and freelance according to the US contract) for years to come. What is the status of this in Germany? What if they were to be my ONLY client? (don't know if this will happen, but who knows?)

 

Finally, does anyone have any recommendations for a Tax Advisor in Germany?

 

Thanks kindly!

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Every single one of your questions have been asked and answered repeatedly on Toytown, so use the search function and get reading. Or maybe you'll get lucky and someone with too much free time will spoon-feed you the answers.

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Here's a quick spoon-feed for you:

1. The Search box on the upper right is your best resource. Use simple terms like "freelance", "tax", "mehrwertsteuer", etc.

2. Ditto

3. Not true. The threshold for paying tax is €8,130 (profit; you can deduct your business expenses from your income first).

4. Probably, but it depends. Germany may base the decision on where the work is performed. But it will be MwSt free below €17,500.

5. You're probably better off having the funds transferred to a German account, because then you only have to pay the transfer fees once. It makes no difference for tax reasons.

6. A freelancer with just one client is "Scheinselbstständig", which is against the rules in Germany because it allows unscrupulous employers to dodge social insurance contributions. But since your client is abroad, it might be difficult for them to even discover this.

 

Make sure to think of health insurance, too.

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I did of course read through a lot of the Toytown forums about Taxes in Germany, and have gathered bits of answers here and there, and implications that I don't really know how to use the search function aren't really that helpful. For the recommendations which I requested, a lot of that stuff is 3,4, 5 years old, so I'm asking again, to see what else everyone has to say.

 

And for the other stuff, some things still just aren't all that clear for me, and I haven't found always exact answers to what I was looking for. So if it's been answered, a link would be better than a chiding about the search function.

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Here's a quick spoon-feed for you:

1. The Search box on the upper right is your best resource. Use simple terms like "freelance", "tax", "mehrwertsteuer", etc.

2. Ditto

3. Not true. The threshold for paying tax is €8,130 (profit; you can deduct your business expenses from your income first).

4. Probably, but it depends. Germany may base the decision on where the work is performed. But it will be MwSt free below €17,500.

5. You're probably better off having the funds transferred to a German account, because then you only have to pay the transfer fees once. It makes no difference for tax reasons.

6. A freelancer with just one client is "Scheinselbstständig", which is against the rules in Germany because it allows unscrupulous employers to dodge social insurance contributions. But since your client is abroad, it might be difficult for them to even discover this.

 

Make sure to think of health insurance, too.

 

Thanks Jefe!

 

One follow up question on numbers 4, 5 and 6 if you would be so kind...

 

4. Okay, so for this year I don't have to pay MWst unless I add a second client... which might happen, and then I can see about it. Any idea about how they decide whether or not it is applicable? And is this something that can be influenced by my actions in any way?

5. Actually for matters of costs, it's cheaper for me to have it go to my US account, because I have a bank account which allows me to take out foreign currencies with no fees. But I was thinking that it might be better for purposes of the German Authorities - 1. for me to move into a private German Krankenkasse 2. For me in a few years to have a base from which to prove income in germany and to get a mortgage.. I was wondering if there is any truth behind this.

6. a. So if I have one client, how long would this be okay for.. meaning, i guess its normal to START with one client, and then one adds more. b. How would they find out? c. Should I work to keep them from finding out (within legal limits) and how?

 

Thanks again!

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I feel a flounce coming on...

 

Nahhhh. Flouncing is silly. Almost as silly as posting "use the search function". Whatever happened to no question is too stupid?

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Just a point or several about medical insurance.

 

If you plan on settling here in Germany and marrying and having a family here, it will be far cheaper to stay in the public medical insurance system (if you're in it already or can get into it).

 

In the private system you would have to take out a separate policy for your spouse - providing she's not earning - and your child/ren.

 

In the public system, your wife and child/ren would be insured through you at no extra cost.

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Almost as silly as posting "use the search function".

 

Nope - you might be suprised how many times we answer identical questions about health insurance, scheinselbständigkeit, customs duties of "gifts" & so on :(

 

 

In the private system you would have to take out a separate policy for your spouse - providing she's not earning - and your child/ren.

 

...and that is ruinous.

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Just a point or several about medical insurance.

 

If you plan on settling here in Germany and marrying and having a family here, it will be far cheaper to stay in the public medical insurance system (if you're in it already or can get into it).

 

In the private system you would have to take out a separate policy for your spouse - providing she's not earning - and your child/ren.

 

In the public system, your wife and child/ren would be insured through you at no extra cost.

 

I guess that is a good idea. I mean when I first came here, I didn't know I would stay, but now it is starting to make sense. I'm going to have to look into it, but from what I have heard it is more difficult for freelancers.

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Hi there,

Welcome to the quite annoying world of Toytown unhelpful answers. Personally I would pay no mind to expats who have lived here a good deal of time and use the forum to condescend to, and criticise newcomers. I was new here once also, and just like you found the self-employment tax (and indeed all the taxation system in Germany) extremely daunting. My strongest recommendation is that you find a Steurberater by word of mouth. They are regulated and almost all self employed people use one, especially if they are non-German. It should cost you no more than around €400-500 yearly if your set-up is reasonably simple. Well worth the money, and it will put the stress to one side for you.

Best of luck, and don't be daunted.

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Hi there,

Welcome to the quite annoying world of Toytown unhelpful answers. Personally I would pay no mind to expats who have lived here a good deal of time and use the forum to condescend to, and criticise newcomers. I was new here once also, and just like you found the self-employment tax (and indeed all the taxation system in Germany) extremely daunting. My strongest recommendation is that you find a Steurberater by word of mouth. They are regulated and almost all self employed people use one, especially if they are non-German. It should cost you no more than around €400-500 yearly if your set-up is reasonably simple. Well worth the money, and it will put the stress to one side for you.

Best of luck, and don't be daunted.

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Just a point or several about medical insurance.

 

If you plan on settling here in Germany and marrying and having a family here, it will be far cheaper to stay in the public medical insurance system (if you're in it already or can get into it).

 

In the private system you would have to take out a separate policy for your spouse - providing she's not earning - and your child/ren.

 

In the public system, your wife and child/ren would be insured through you at no extra cost.

 

Good points but he´s a freelance American..which means: how should he get into public insurance here?

I am a professional independent insurance broker and authorised advertiser. Contact me.
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Hi there,

Welcome to the quite annoying world of Toytown unhelpful answers. Personally I would pay no mind to expats who have lived here a good deal of time and use the forum to condescend to, and criticise newcomers. I was new here once also, and just like you found the self-employment tax (and indeed all the taxation system in Germany) extremely daunting. My strongest recommendation is that you find a Steurberater by word of mouth. They are regulated and almost all self employed people use one, especially if they are non-German. It should cost you no more than around €400-500 yearly if your set-up is reasonably simple. Well worth the money, and it will put the stress to one side for you.

Best of luck, and don't be daunted.

 

That depends. Some Toytowners are extremely helpful. Re tax: have you ever read anything by PandaMunich on here? Amazingly helpful and knowledgeable. And free of charge AND so patient.

I am a professional independent insurance broker and authorised advertiser. Contact me.
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@ jimmycoffee, you are welcome to grumble about the value of answers offered by other TT members if it makes you feel better, but it may have escaped your notice that the OP could easily have avoided the annoyance of being advised to use the search function if his opening post had included some hints that he had already exhausted, or at least tried, that option.

 

Doing that may have saved others assumng he was merely another one of the daily dozen who post a list of personal service needs (few of whom tend to demonstrate half as much willingness to answer other stranger's queries as they do in needlessly complaing about long established forum behaviour patterns).

 

Be that as it may, as john_g. said, there are many very helpful TTers who have been building up the archives for many years. Indeed much of the info that profnor asked about has been posted by PandaMunich in various logical sections of the TT Wiki (to be found by clicking the "Other features" tab at the top).

 

OP, please try referring to the following TT Wiki links on the German taxes page:

 

 

  • Elster: income tax return, electronically or on paper forms, with step-by-step instructions (for freelancers scroll down to the turquoise section)

 

2B

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I did of course read through a lot of the Toytown forums about Taxes in Germany, and have gathered bits of answers here and there, and implications that I don't really know how to use the search function aren't really that helpful. For the recommendations which I requested, a lot of that stuff is 3,4, 5 years old, so I'm asking again, to see what else everyone has to say.

 

And for the other stuff, some things still just aren't all that clear for me, and I haven't found always exact answers to what I was looking for. So if it's been answered, a link would be better than a chiding about the search function.

 

If you find the posts by PandaMunich, you will see that the info is pretty up to date. Because there is so much information already provided on this forum, using the search function may actually have you spending hours upon hours viewing the similar questions and answers available.

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Along the same lines I also need to find a Stueuerberater as well. I spoke with the bank manager and he suggested doing a google search and reading reviews, which is a good idea except there isn't much there. Any German websites or forums where you can read reviews this may sound odd as I'm an English speaker but I know from experience a good SB can make all the difference in getting a return accepted or ejected. Also I would specifically like negative reviews as they balance positive reviews.

 

I've done a ton of reading taxes here (thanks PandaMunich) but there are things that only a well informed Stueuerberater can answer. For example how will Munich view superficial loss selling. Since I invest overseas wii they accept trading slips over tax documents, better to position my tax selling losses etc.

 

We're also looking at investment property, so what is the best way from a tax point of view to maximise gains while minimalizing taxes. Etc.

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Along the same lines I also need to find a Stueuerberater as well. I spoke with the bank manager and he suggested doing a google search and reading reviews, which is a good idea except there isn't much there. Any German websites or forums where you can read reviews this may sound odd as I'm an English speaker but I know from experience a good SB can make all the difference in getting a return accepted or ejected. Also I would specifically like negative reviews as they balance positive reviews.

 

I've done a ton of reading taxes here (thanks PandaMunich) but there are things that only a well informed Stueuerberater can answer. For example how will Munich view superficial loss selling. Since I invest overseas wii they accept trading slips over tax documents, better to position my tax selling losses etc.

 

We're also looking at investment property, so what is the best way from a tax point of view to maximise gains while minimalizing taxes. Etc.

 

PandaMu :) nich is a Steuerberater(in).

I am a professional independent insurance broker and authorised advertiser. Contact me.
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